Economic News Fails to Support the Market 03-26-15

In a speech earlier this week, Federal Reserve Vice Chairman Stanley Fischer said than “an increase in the target federal funds [rate] range likely will be warranted before the end of the year” and that should happen when “the expected return from raising the interest rate outweighs the expected costs of doing so.” In making the decision, “a wide range of information regarding labor market conditions, inflation, and financial and international developments” will be considered.
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Market Message from the Fed 03-19-15

So far this year, U.S. equities are slightly positive, thanks in no small part to a strong showing yesterday. Considering the overall length of the current bull market, we cannot consider stocks’ year-to-day performance a bad result.

Stocks rallied Wednesday after the central bank’s Federal Open Market Committee (FOMC), as expected, dropped the word “patient” from its policy statement. Read more about Market Message from the Fed 03-19-15

A More Modern Dow 30 Welcomes Apple 03-12-15

The stock market didn’t like the latest jobs report. The decline of the indices from near-record levels earlier this week, while the dollar rallied, clearly indicated the key topic on the minds of investors: the schedule by which the Fed plans to change interest rates. The market spent today in recovery mode.

With a seemingly strong job market, at least according to the headline unemployment number, investors now seem to believe the last report from Fed Chair Janet Yellen, namely that the timing of the rate increase will depend on economic data.  

Payrolls added some 295,000 workers in February. The headline unemployment rate fell to 5.5 percent—the lowest in seven years. June is suddenly back on the schedule for the Fed to begin raising rates, as the 5.5 percent falls within the Fed’s definition of full employment (it considers anything from 5.2 to 5.5 full employment). Read more about A More Modern Dow 30 Welcomes Apple 03-12-15

The Fed Is Expected To Remain Patient 02-26-15

At least two more meetings until the Fed will begin raising rates, according to the two-day testimony Fed Chair Janet Yellen gave before Congress this week. If it does not sound like something new, it isn’t. The Fed had said that it would be patient in its rate-increase endeavor, and so the markets already anticipate that there would be no rate change until at least summer. Still, equities were mildly encouraged, and moved moderately higher, to reach new intraday highs, yesterday.

Fed officials have no fixed, pre-established schedule according to which they will impose policy changes. That means, as the economic signals remain mixed, analysts cannot determine the exact timeline for a rate increase simply by following the unemployment and inflation markers.
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March 2014

Looking for Leaders

This issue we look at economic growth and central bank easings around the world. We sell a Brazilian utility and buy a consumer staple. We also review our three utility stocks and reiterate our recommendation.

In our Market Pulse section, we look in more detail at U.S. growth and how the current pace of expansion compares to the past, a manager change at one of our recommended funds, and age and retirement plans. In our Maximum Money section, we highlight a special type of closed-end funds, one that specializes in the covered-call strategy. Read more about Looking for Leaders